ABSTRACT

Financial Literacy is the ability to make informed judgments and to make effective decisions regarding the use and management of money .The need for financial literacy cant be over emphasized in this our time even as the Central Bank of Nigeria seeks to enahance an efficient economy especially through the e- banking system and thus creating a cashless economy beginning form June 1 2012.
Financial system plays a crucial role in the process of financial intermediation in Particular to the growth of the economy as a whole Hence a better understanding of how it work and what they offer and how to utilize the financial products by the participants of the economy help to create a viable financial system and in turn enhance economic development as the chain effect of a viable financial system can’t be denied on the economy. Financial literacy helps an individual fulfill personal, family, social and governmental responsibilities. Financial education has always been important for consumers in helping them budget and manage their income, save and invest efficiently, and avoid becoming victims of fraud. As financial markets become increasingly sophisticated and as households assume more of the responsibility and risk for financial decisions, financial education is increasingly necessary for individuals, not only to ensure their own financial well-being but also to ensure the smooth functioning of financial markets and the economy.Surveys of financial literacy indicate consumers in many countries especially African countries do not have adequate financial background or understanding and that they estimate their needs for financial education. It has also been observed that a major bane of economic development is lack of financial literacy and inability to maximize the growing financial markets, due to the ever increasing products and services which are continuously offered.

The study was carried in order to seek to advance dialogue on financial literacy and analyze its impact on economic development. The Primary data was used in carrying out the study .Specifically, the tool statistical package for social sciences was used to evaluate the impact of financial literacy on economic development.
The study showed that the financial literacy is essential for a viable financial system which would in turn have its effect on the economy as a whole. Also the study showed that economic participants who aren educated up to the level of SSCE and below find it difficult comparing financial products,making use of cash and non cash payments,understanding financial terms etc. the study also found out that high income earners mostly have a good level of financial literacy especially the educated ones while the uneducated one are only aware of basic knowledge of financial products like savings and current accounts
The results of the study revealed that Financial literacy has an impact on economic development and financial literacy plays an essential role in creating a viable financial system that is there is a link between financial literacy and financial system and institutions and economic development

CHAPTER 2: LITERATURE REVIEW
2.1: Conceptual framework………………………………………………
2.2: The concept of financial system…………………………………
2.2.1: The concept of financial distress…………………………………
2.2.2: The types of banks…………………………………………………
2.3: The gap in financial system…………………………………………
2.4: The role of banks in filling the gaps in financial system…………
2.5: The structure of Nigeria banking system…………………………
2.6: The distress in commercial and merchant bank…………………
2.7: Causes of distress in commercial and merchant bank…………
2.8: commercial and merchant bank and economic growth…………
2.9: The effects of commercial and merchant bank distress on the growth of
the economy………………………………………………………………..